Indonesia"s Oil Reserves Lowest in 16 Years

Indonesia’s oil reserves are depleting year by year. In the first half of 2016, the country’s oil reserves were the lowest since 2000.

The Energy Ministry’s Director General of Oil and Gas I.G.N. Wiratmaja Puja said that Indonesia’s remaining oil reserves in the first semester of the year amounted to just 2,933 million stock tank barrels (mmstb). This figure is only for proven reserves (P1).

(Read: Minimal Exploration, Oil Reserves Down Almost Four Percent)

According to data from the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), oil reserves in the first half of this year were the lowest since 1 January 2000, when oil reserves amounted to 5,088 mmstb.

The figure has fluctuated from year to year. Between 1 January 2000 and 1 January 2005, proven oil reserves decreased to 4,187 mmstb. On 1 January 2006, reserves had risen to 4,371 mmstb, before falling consistently to 2,933 mmstb in the first semester of this year.

According to the ministry’s Head of Communications, Public Information Services and Cooperation Sujatmiko, this figure does not only include proven reserves. “Per information about reserves, this figure is the total of P1, P2 and P3, based on the preliminary figures for 2016 or the position as of the second quarter,” he told Katadata, Monday (25/7).

Meanwhile, SKK Migas Chief Amien Sunaryadi confirmed that there has been a downward trend in oil reserves in recent years, despite an increase in the number of fields. In 2000, there were just 632 fields, compared with 757 in 2015.

According to Amien, these figures indicate that more exploration is needed in the upstream oil and gas sector. “To increase reserves, aggressive exploration is essential,” he said. (Read: Few Oil and Gas Wells Drilled in Past Six Months)

Amid sluggish oil prices, upstream exploration activities are below target. For example, in the first six months of this year, only 19 exploration wells were drilled, against this year’s work plan and budget target of 137 wells.

Member of the Advisory Board of the Reforminer Institute Pri Agung Rakhmanto said this decrease in oil reserves is now at crisis point, and has now gone beyond the 6-10 year exploration cycle. “That means no significant new oil reserves have been found during that period and beyond,” he said.

The underlying problem is the management system. Since the introduction of Law No. 22/2001 on Oil and Gas, the management of the sector has been taken out of the hands of business and transferred to the government bureaucracy.

According to Pri, flexibility is key to investment in Indonesia’s upstream oil and gas industry because the government does not finance investment. “Flexibility is only something that businesses can offer; bureaucratic procedure cannot,” he said (Read:  SKK Migas Functions Could Revert to Pertamina)

On its part, the government must finalise revisions to the oil and gas law as soon as possible, and if necessary, issue a government regulation in lieu of a law.